The Metropolitan Water Reclamation District of Greater Chicago provides an excellent example of how to combine stimulus financing options with traditional instruments to stretch resources as far as possible.

The district treats wastewater and controls stormwater for more than 10 million customers, making it the largest facility of its kind in the world. A statutory debt limit of 5.75% EAV (equalized assessed value) on its $1.7 billion annual budget provides a debt margin of $7.7 billion. As of December 2009 it had $2 billion of debt.

More than half ? 80% ? of the district's revenues comes from property taxes. Although interest income has taken a hit, Executive Director Richard Lanyon doesn't expect a large decrease in property tax revenues over the next year or so.

Still, it never hurts to explore your options.

The district generally issues general-obligation bonds every other year as needed. But last year it sold $600 million in Build America Bonds (BABs), the district's largest single bond sale since it was founded in 1889. These taxable bonds, introduced in the stimulus package, let issuers choose between receiving a 35% reimbursement of the associated interest or a federal tax credit equal to 35% of the cash interest payment.

District accountants crunched the numbers. After factoring in the reimbursement, the interest cost on $600 million in BABs is 3.72% compared to 4.88% for traditional tax-exempt fixed-rate bonds. Thus, taxpayers will save $180 million over the next 29 years in the form of monies the district would have used to service debt.

Labeling the process a "very rewarding experience," Lanyon says the district plans to sell another $600 million this year.

Build America Bonds are available only through Dec. 31 of this year.

This particular financing option may not be right for your operation's particular needs. But for other operations, especially those that didn't receive other stimulus-related breaks, such as low-interest loans or principle forgiveness, it's a way to fund capital improvements or new infrastructure that didn't exist before the American Recovery and Reinvestment Act of 2009.

And it's brought down interest rates on municipal bonds overall, from 4.5% in January 2009 to 3.7% today.

While I'm on the subject of innovative financing, here's another thing the district is doing: ensuring its 2,100 employees receive benefits when they retire. More about that next time.

Until then, click here for more information on the district's financials and long-term plans. And I'd appreciate hearing from those of you who looked at Build America Bonds but decided against it. Why?